Watching for insights into economic policies
TODAY'S 2021 State of the Nation address (Sona) takes place in a new world compared with last year, and market watchers hope President Cyril Ramaphosa will present practical measure to kickstart the economy out of the Covid-19 pandemic and fix broken parastatals.
The rand, at under R15 to the dollar, is back to about where it was at last year’s Sona, having weakened considerably to above the R19 to the dollar mark in April as the Covid-19 panic took hold of the markets. But, according to Peregrine Treasury Solutions executive director, Bianca Botes, its strength over the past few months has more to do with global factors such as fiscal stimulus, risk-on sentiment and the hunt for yield, rather than the easing of lockdown restrictions locally.
“As local focus shifts to President Ramaphosa’s speech, we will be watching carefully for any insights into government’s economic policies, as well as how government intends to address the glaring issues at stateowned enterprises such as Eskom and SAA, which continue to weigh heavily on the country’s already overburdened balance sheet,” she said.
Investec chief economist Annabel Bishop said the Sona would be key in the updates it provided on the focus of government policy, such as on the Economic Reconstruction and Recovery Plan, while the state’s plans to contain the Covid-19 epidemic were likely to take up much of the airtime.
The concern is that nothing new will be announced that meaningfully shifts the smouldering regulatory burden, and so makes it easier to do business. “What South Africa needs is a pragmatic plan for reviving the economy. With unemployment at an all-time high, we need to see plans and policies that speak to this critical challenge,” said The Business Exchange’s chief executive, David Seinker.
He said one of the most effective ways to create employment, and perhaps the only sustainable way, was to provide SMES and entrepreneurs with the support they needed to start and grow businesses.
“Simply, Sona needs to be less aspirational and more practical,” he said.
Spear capital partner Bryan Turner said that although Ramaphosa did a good job of attracting new investment to South Africa prior to the pandemic, he would need to act with greater urgency to revive the economy.
“While previous Sonas focused on investments that create new manufacturing and business capacity, he (Ramaphosa) should widen the net and make it easier for external investors, in the private equity space for example, to turn around existing operations that still have the potential to succeed.
“Helping struggling businesses to survive the pandemic is crucial to retain jobs and to create more job opportunities,” said Turner.
Hoorah Digital’s chief commercial officer, Shaune Jordaan, said that they were hoping to see strategies that outline plans for growing a digital economy. “Digital systems, by their nature, were geared for efficiency, particularly when it came to cost,” he said.
Radisson Hotel Group Middle East & Africa senior area vice-president Tim Cordon said the recent launch of the R1.2 billion Tourism Equity Fund had injected hope into the ailing tourism sector, but with visitor arrival numbers still woefully low on the back of months of lockdown and immigration bans, “it’s imperative we hear more from him tomorrow about this critical contributor to employment and to the country’s economy as a whole.”
He said this time last year tourism authorities were saying that the time for one-liners and sweeping statements about the importance of the sector had passed, and strategic intervention was essential to realise the goal of raising tourism numbers.
“We’re in a whole new world now, but the same principle certainly applies if we are to set this very important contributor to our fiscus firmly back on track.”
Vapour Products Association of South Africa chief executive Asanda Gcoyi said the president and the government’s recognition of the value of working closely with social partners, including civil society, business and labour last year was commendable.
“That said, there’s room for the government to broaden its social compact collaborations to include sectors that aren’t in the mainstream.
“By responding together to the socio-economic challenges the country currently faces, South Africa will be better equipped to formulate regulations and other legislation for fledgeling and under-represented industries, such as the electronic vapour products sector, in a more balanced manner,” Gcoyi said.